End of rent regulations in France

30 November 2017

In a judgment delivered Tuesday, November 28, the Administrative Court of Paris has cancelled the orders implementing the rents in the capital.

The administrative judge of Paris pronounced last Tuesday the annulment of the provision of rent regulations in the French capital. This decision results from a judgment focused on the strict respect of legal texts. Recall that On October 17, a judgment of the administrative court of Lille annulled this measure in the commune of Lille, in the north of France.

The administrative judge of Paris “cancelled” the three orders made by the prefect in 2015, 2016 and 2017 to set reference rents. The provision should have been applied to the entire Paris agglomeration, and not only the city intra-muros, in order to to comply with the law, according to the judgment.

Like for Lille, the government quickly announced its decision to appeal for Paris. On Wednesday morning on France Inter, Cécile Duflot, at the origin of this law when she was minister of housing, asked that the government to “keep its promise” and apply the law. According to her, the controls “works well”. This is why she claims that it should be extended “throughout the Ile-de-France region” and in all “the communes that need it”.

As a reminder, the principle of the regulation of the rents had to oblige the owners to respect a ceiling price, fixed according to the geographical area and the type of housing, at the time of concluding a lease.

Thus, the rent of a dwelling could not exceed by 20% a reference rent fixed by prefectural decree, nor be lower by 30%.

Faced with this new decision, the fear is to see rents again increased in the capital. However, this is not relevant. Those who currently benefit from framed rates will continue to have the same rent. The owners will be able to raise their prices to the renegotiation of the lease or to new tenants. So far, we had mostly frozen rises in the capital after years of explosion in prices.

So, will the rents rise again? Not sure. First, many homeowners got out of the game and sold their properties. The agencies Guy Hoquet, for example, have seen disappear 15% of the park of apartments which they rented. Then, in the most touristy areas of Paris, the leases switched to systems like AirBnB which are not framed.

In any case, one thing is certain, it will take time to return to an integrated system within a real political will. Because it would be necessary to set up a grid of tariffs, quarter by quarter, for the 412 communes of the agglomeration of Paris.

Cabinet Roche & Cie, Chartered english speaking accountant in Lyon, France.
Specialist in Real estate and non-résidents taxation.

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